'Grandparent scams' steal thousands from seniors

Since 2010, the FTC has recorded more than 40,000 cases where scammers impersonate friends and family members. And officials think many more instances go unreported.

Across the country, law enforcement officials are warning seniors to beware of so-called "grandparent scams," in which fraudsters are impersonating a grandchild in distress -- and begging for cash.

Such scams have become increasingly common. In 2009, the Federal Trade Commission recorded 743 incidences of scammers impersonating a family member or friend in need of money. Since 2010, the FTC has recorded more than 40,000 and it is estimated that many more go unreported.

Ann and John Mykietyn never imagined they could be duped out of thousands of dollars. But then, last fall, they got a call from someone claiming to be their grandson, Daniel, that threw them into two days of panic.

He told them he had been in a car accident while at a bachelor party in Mexico and needed $1,800 to get out of jail. The next day, he called back frantic that his wallet had been stolen and he needed $2,400 to get a new passport.

Anxious to help their grandson return home, they sent two MoneyGram cash transfers to Mexico. They even sent a third after a man called claiming one of the transfers had been rejected. But when they never heard back, they realized that the caller hadn't been their grandson after all. The New Jersey residents had lost nearly $7,000 to a scammer.

"You get angry at yourself for being so foolish, but you're in a panic mode," Ann Mykietyn said. "You don't want any harm to your grandchild. "

They filed a report with local police, but their cash was already long gone. Police told them there is little chance their money will be recovered.

Warnings about grandparent scams have been issued by law enforcement and Better Business Bureaus across the country in recent months.

"It's everywhere. It's an epidemic," said Jean Mathisen, manager of the AARP's Fraud Fighter call center, which has fielded hundreds of calls about grandparent scams so far this year.

While law enforcement officials have been cracking down on grandparent scammers operating out of boiler rooms in Canada, new criminals continue to pop up, said Steven Baker, director for the FTC's Midwest Region.

Exactly how much has been lost to these scammers is unknown, but it's estimated to be in the tens of millions of dollars or more.One Michigan couple lost $33,000 of their life savingswhen a man pretending to be their grandson called, asking for cash to help him pay a fine and post bond to get him out of a Canadian jail.

The typical M.O.: "Grandma (or grandpa), are you there?" a caller will say, prompting the senior to reveal a name or other identifying information. The caller then says they werein a car accident, mugged or incarcerated in a foreign country -- all emergencies prompting an urgent need for cash.

Typically, the caller begs for secrecy, in order to prevent a quick phone call to the grandchild's parents to verify the story. When asked why their voice sounds funny, they'll usually claim their nose or mouth is injured. Once a victim wires money, more calls may follow, employing other callers who pose as attorneys, bail bondsmen or doctors.

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Security officials at money transfer services, Western Union and MoneyGram, say they work with law enforcement whenever possible.

Western Union's transfer forms specifically warn senders not to send money for an unconfirmed emergency related to a grandchild or other family member. The company also trains employees to look for warning signs and gives them the authority to refuse transactions that they believe are fraudulent.

MoneyGram also has a fraud warning on transfer forms and says it can put holds on transfers that raise red flags. Because once a transaction goes through, "it's picked up in minutes and it's gone," said Kim Garner, senior vice president of Global Securities and Investigations.